| The
chain of events that begins when a merchant swipes
a customer’s card is a fairly simple one.
At minimum, it requires four entities: a bank,
Visa/MasterCard, a telephone or Internet connection,
and a processor. The processor operates the computer
systems that authorize transactions and convert
them into money to be deposited into the merchant’s
bank account. These four entities are essential
to processing every card transaction.
This simple process doesn’t
change – but becomes more expensive –
when non-essential middlemen are involved. Sometimes,
as many as 12 additional, but different, entities
take a cut from one simple transaction.
There
can be the
(1) independent contractor that represents
(2) a sub-ISO of
(3) an ISO which represents a
bank or processor. Plus
(4) a referral group,
(5) an accounting firm or
(6) a non-processing
bank. Add in
(7) the enterprise software company
(8) the software salesperson and
(9) the dealer
who sold the equipment – plus the
(10) IP
gateway provider
(11) the person who sold it and
(12) the network software provider.
The bottom
line is that a lot of middlemen can be making
money off of every single transaction. When too
many entities are involved, it’s hard for
merchants to control their costs.
Large merchants don’t
allow middlemen to be involved because they recognize
the drain on revenue does not come with equivalent
value. Small and mid-sized businesses shouldn’t
allow these unnecessary drains on their revenue
either.
Small businesspeople
have the right to know how many hands are automatically
deducting cash from their checking account. |
